About ocean shipping telegraphy, there are still many things you don’t know

You don't know everything about ocean shipping telegraphy

Electric release refers to the shipper (sender) delivering the full set of signed original bills of lading issued by the carrier (or its agent) to the carrier (or its agent) after the goods have been loaded onto the ship, while specifying the consignee (in the case of a non-named bill of lading); the carrier authorizes (usually via telegraph, telegram, or other communication methods) its agent at the port of discharge to release the goods without the production of the original bill of lading (which has been returned) by the consignee.

Arrival at the port of discharge

The situation where the goods arrive at the port of discharge before the bill of lading is common as the efficiency of port loading and unloading has greatly improved with the continuous progress and development of shipping technology, especially with the popularity of container transportation.

This situation is more prominent in ocean shipping. For example, when China exports goods to various countries or regions in East Asia and Southeast Asia, due to the short distance of the voyage and the relatively slow speed of bank examination and processing of documents, it is common for the goods to arrive before the bill of lading.

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In addition, for long-distance cargo transportation, accidents may also occur during the mailing of documents, such as delayed or incorrect mailing of documents, or delays caused by clarifying doubts about documents, resulting in the documents arriving at the consignee later than the scheduled time.

In this case, if the consignee still insists on picking up the goods with the original bill of lading, it may cause the goods to be stuck on the ship or at the port of discharge, resulting in port fees and storage costs increasing significantly and increasing the carrier’s cost burden. Similarly, it may also cause the consignee to miss a good opportunity to sell the goods.

Risk avoidance: Avoid the risk of document loss

According to the International Convention on the Carriage of Goods by Sea, international trade practices, and the laws of most countries, in international cargo transportation, as long as the carrier issues a bill of lading, the consignee must present the original bill of lading to take delivery of the cargo at the port of discharge (however, according to the relevant laws of the United States, the consignee of a named bill of lading does not need to present the original bill of lading to take delivery).

Therefore, no matter what settlement method is adopted, the bill of lading must be transferred from the shipper to the consignee. During the transfer of the bill of lading, there may be risks of loss in the mail. Regarding the risk of loss of transport documents in the mail, in accordance with Article 35 of UCP600 and Article 14 of URC522, banks are not responsible for this. Once transport documents including bills of lading are lost, traders may request the carrier to issue a replacement bill of lading.

In order to prevent the holder of the bill of lading from falsely claiming the cargo, the carrier is very cautious and makes very strict requirements on the applicant, such as publishing a declaration in advance or depositing several times the value of the cargo in cash or bank drafts without interest into the carrier’s account, or providing relevant guarantees by the bank. Banks that provide guarantees often require traders to provide cash or other forms of counter-guarantees.

As a result, not only do traders need to occupy a large amount of capital, but the transaction costs also increase significantly, and the time required to process the application for replacement bill of lading can range from several months to more than a year.

Therefore, for consignees or importers with good credit, in order to avoid the risk and increase the cost of lost documents, exporters sometimes take the initiative to propose to the carrier to use the “telex release” method of delivery.

Freight Forwarding: Freight forwarders’ bills of lading cannot be used for cargo delivery.

With the opening of the Chinese shipping market, the competition in the domestic international transportation and freight forwarding business has become fierce. Foreign freight forwarding companies (referred to as foreign freight forwarders or freight forwarders) in China have begun to issue their own house bills of lading, forming a transportation contract relationship with the shipper.

Meanwhile, foreign freight forwarders must find actual carriers to transport export goods, that is, foreign freight forwarders act as shippers themselves, and the carrier issues a bill of lading to them, or instructs the carrier to issue a bill of lading according to their requested shipper (usually the importer).

When the goods arrive at the destination port, the holder of the foreign freight forwarder’s bill of lading exchanges it for the carrier’s bill of lading from the freight forwarder or its agent at the destination port, and then picks up the goods from the carrier or its agent with the carrier’s bill of lading; or the freight forwarder or its agent picks up the goods with the carrier’s bill of lading first, and then the holder of the freight forwarder’s bill of lading picks up the goods from the freight forwarder or its agent with the freight forwarder’s bill of lading.

It can be seen that this type of freight forwarder actually has a dual identity: for the carrier (actual carrier), this type of freight forwarder acts as a shipper, arranges the transportation of goods and signs a transportation contract with the actual carrier, and obtains the carrier’s bill of lading issued by the carrier.

At the same time, for the shipper, this type of freight forwarder acts as the carrier and issues its own freight forwarder’s bill of lading to the shipper. The entire transportation of goods can only be completed smoothly if the carrier’s bill of lading and the freight forwarder’s bill of lading are used in conjunction.

Although UCP 600 recognizes the freight forwarder’s bill of lading, that is, the freight forwarder as the carrier can issue its own bill of lading. However, in practice, not all countries or regions recognize and accept the freight forwarder’s bill of lading, such as some countries in South America currently do not accept the freight forwarder’s bill of lading.

If the destination port only accepts the carrier’s bill of lading and not the freight forwarder’s bill of lading, the consignee may not be able to pick up the goods even if they hold the original freight forwarder’s bill of lading. In this case, the consignee may request to release the goods through “telegraphic release”.

Error correction: Bill of lading operation error

In trade practice, operational errors in the process of bill of lading circulation may also result in the consignee holding the original bill of lading but unable to pick up the goods.

For example, the carrier issues a blank order bill of lading or the shipper issues a bill of lading to the order of the shipper. If traders agree to use payment by collection or settlement, when the shipper sends the shipping documents to the consignee, for various reasons, the bill of lading may not be properly endorsed.

When the importer receives such an original bill of lading, because the endorsement of the bill of lading lacks continuity and does not meet the basic requirements of the bill of lading operation regulations, the importer cannot prove that it is the legal holder of the bill of lading. In this case, the shipping company or its discharging port agent will not release the goods to the holder of the bill of lading.

At this time, if the bill of lading is sent back to the shipper for additional endorsement, it may cause delay. Therefore, importers who hold bill of ladings without the shipper’s endorsement usually request “telegraphic release” of the goods in order to pick them up as soon as possible.

Shanghai Lisheng & Danjisi International Logistics Co., Ltd. Wang Jie TEL

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